"Value has performed relatively poorly since the 2017 shift, but we believe challenges to the S&P 500’s dominance are mounting and resulting active opportunities away from the index are growing. At some point, this fault line will break, likely on the back of rising rates, and all investors will be reminded that the best time to diversify away from the winners is when it is most painful. The bargain of capturing long-term value may be short-term pain, but enough is eventually enough and it comes time to harvest the benefits.," said Clearbridge Investments in its market commentary. We aren't sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That's why we believe it would be worthwhile to take a look at the hedge fund sentiment on Genworth Financial Inc (NYSE:GNW) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Genworth Financial Inc (NYSE:GNW) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds' portfolios at the end of the fourth quarter of 2018. At the end of this article we will also compare GNW to other stocks including Boyd Gaming Corporation (NYSE:BYD), Genomic Health, Inc. (NASDAQ:GHDX), and CNX Resources Corporation (NYSE:CNX) to get a better sense of its popularity.
In today’s marketplace there are tons of indicators stock traders employ to assess publicly traded companies. A duo of the most innovative indicators are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the elite investment managers can outperform the market by a healthy amount (see the details here).
We're going to take a gander at the key hedge fund action encompassing Genworth Financial Inc (NYSE:GNW).
How have hedgies been trading Genworth Financial Inc (NYSE:GNW)?
At Q4's end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GNW over the last 14 quarters. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Genworth Financial Inc (NYSE:GNW) was held by Shah Capital Management, which reported holding $29.7 million worth of stock at the end of September. It was followed by D E Shaw with a $9.2 million position. Other investors bullish on the company included Beryl Capital Management, Marshall Wace LLP, and GLG Partners.
Due to the fact that Genworth Financial Inc (NYSE:GNW) has experienced a decline in interest from the aggregate hedge fund industry, it's easy to see that there is a sect of money managers that decided to sell off their positions entirely by the end of the third quarter. Interestingly, Boaz Weinstein's Saba Capital cut the biggest investment of the "upper crust" of funds followed by Insider Monkey, valued at about $9.7 million in stock, and Jamie Zimmerman's Litespeed Management was right behind this move, as the fund dropped about $2.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Genworth Financial Inc (NYSE:GNW). We will take a look at Boyd Gaming Corporation (NYSE:BYD), Genomic Health, Inc. (NASDAQ:GHDX), CNX Resources Corporation (NYSE:CNX), and First Financial Bancorp (NASDAQ:FFBC). This group of stocks' market valuations are similar to GNW's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BYD,30,461140,-3 GHDX,24,1022530,6 CNX,23,747911,0 FFBC,6,17474,-1 Average,20.75,562264,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $562 million. That figure was $70 million in GNW's case. Boyd Gaming Corporation (NYSE:BYD) is the most popular stock in this table. On the other hand First Financial Bancorp (NASDAQ:FFBC) is the least popular one with only 6 bullish hedge fund positions. Genworth Financial Inc (NYSE:GNW) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately GNW wasn't nearly as popular as these 15 stock and hedge funds that were betting on GNW were disappointed as the stock returned -20.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.